Cloverdale facing huge water, sewer rate hikes

March 7, 2013, 7:23PM

03/07/2013

Cloverdale residents are on the verge of seeing steep jumps in their water and sewer bills, the result of a combination of forces, including the recession and the postponing of previous rate hikes.

With consultants recommending a 67 percent increase in water rates and a 25 percent hike for wastewater rates to take effect in April, the City Council ordered a review from the public works department to help explain why.

"With development in the 2000s, we didn't increase rates as much as we should have. No one frankly was beating the drum to get us to do it," Vice Mayor Carol Russell said last week.

A report prepared by Public Works Director Craig Scott said that a year after the last rate increase in 2005, "the global financial meltdown occurred along with the collapse of the housing bubble."

As a result, he said many homes ended up being vacated due to foreclosure, and there was a dramatic drop in revenue for the utilities as growth stalled.

"These events also brought to a halt new development which was to bring in over $1 million for each utility to help pay for capital projects and pay the debt service on existing debt," he said.

Mayor Joe Palla said while no one is happy about seeing their bills jump, "a lot have said they appreciate that they had such low rates the last seven years. They could have been paying a lot more."

"Basically people have been getting cheap water. We are the cheapest water in the county," he said.

The increases recommended by Reed Group consultants would bring the typical residential combined monthly bill from the current $59 to $91.

That is still lower than most other cities in Sonoma County, including Healdsburg at $137, Santa Rosa at $116, and Petaluma at $96, according to figures cited by the Reed Group.

Consultants said the increases are needed in Cloverdale for maintenance and system upgrades. In addition to the large increase this year, they are recommending 5 percent increases annually through July 2016.

The city has held a series of outreach meetings, including with seniors and the business community, to explain the reasons behind the rate increases.

The City Council at a March 13 public hearing is scheduled to consider voting on the proposed rate hikes.

Although many people would prefer smaller initial increases, city leaders say the alternatives are limited.

"The options are slim as to what we have available to do," Palla said.

"I know the need is there. The city must make these improvements to maintain our systems and pay down our obligations," he said.

The improvements are not only to serve current customers, he said, but to accommodate the growth foreseen in the general plan of 12,000 residents by 2025.

Cloverdale has had a convergence of factors that have contributed to the problem. Poor well production led to difficulties in satisfying water demands on hot days during drought conditions.

Calls to reduce water usage led to conservation, but also to a corresponding drop in water revenues and staff reductions, according to Public Works Director Scott.

There were costs to replace a well, for completion of several test wells and unprogrammed improvements to replace undersized and aged water and sewer infrastructure downtown.

Cloverdale residents are on the verge of seeing steep jumps in their water and sewer bills, the result of a combination of forces, including the recession and the postponing of previous rate hikes.

With consultants recommending a 67 percent increase in water rates and a 25 percent hike for wastewater rates to take effect in April, the City Council ordered a review from the public works department to help explain why.

"With development in the 2000s, we didn't increase rates as much as we should have. No one frankly was beating the drum to get us to do it," Vice Mayor Carol Russell said last week.

A report prepared by Public Works Director Craig Scott said that a year after the last rate increase in 2005, "the global financial meltdown occurred along with the collapse of the housing bubble."

As a result, he said many homes ended up being vacated due to foreclosure, and there was a dramatic drop in revenue for the utilities as growth stalled.

"These events also brought to a halt new development which was to bring in over $1 million for each utility to help pay for capital projects and pay the debt service on existing debt," he said.

Mayor Joe Palla said while no one is happy about seeing their bills jump, "a lot have said they appreciate that they had such low rates the last seven years. They could have been paying a lot more."

"Basically people have been getting cheap water. We are the cheapest water in the county," he said.

The increases recommended by Reed Group consultants would bring the typical residential combined monthly bill from the current $59 to $91.

That is still lower than most other cities in Sonoma County, including Healdsburg at $137, Santa Rosa at $116, and Petaluma at $96, according to figures cited by the Reed Group.

Consultants said the increases are needed in Cloverdale for maintenance and system upgrades. In addition to the large increase this year, they are recommending 5 percent increases annually through July 2016.

The city has held a series of outreach meetings, including with seniors and the business community, to explain the reasons behind the rate increases.

The City Council at a March 13 public hearing is scheduled to consider voting on the proposed rate hikes.

Although many people would prefer smaller initial increases, city leaders say the alternatives are limited.

"The options are slim as to what we have available to do," Palla said.

"I know the need is there. The city must make these improvements to maintain our systems and pay down our obligations," he said.

The improvements are not only to serve current customers, he said, but to accommodate the growth foreseen in the general plan of 12,000 residents by 2025.

Cloverdale has had a convergence of factors that have contributed to the problem. Poor well production led to difficulties in satisfying water demands on hot days during drought conditions.

Calls to reduce water usage led to conservation, but also to a corresponding drop in water revenues and staff reductions, according to Public Works Director Scott.

There were costs to replace a well, for completion of several test wells and unprogrammed improvements to replace undersized and aged water and sewer infrastructure downtown.

The city also never implemented water rate increases recommended by a previous consultant to take effect in 2001, 2002 and 2006.

"At this point I don't see any major slip-up," Russell said, maintaining that there was no obvious mistake to blame for the rate dilemma.